Dow soars to highest level in 13months

Wall Street

November 10, 2009|By Jerry Hirsch, Los Angeles Times

The Dow Jones average of blue-chip stocks rallied to its highest level in more than a year Monday after Group of 20 finance ministers and central bankers reassured investors this weekend that they would continue working to prop up world economies and keep interest rates low.

"The rally has been going for some days now. More than anything, it is the continuation of good data -- better than expected economic reports," said Jim Paulsen, chief investment strategist at Wells Capital Management in Minneapolis.

During the third quarter, for example, 85 percent of the companies that have reported so far have beat Wall Street's profit expectations, he said.

"Once we get to positive job growth, the debate will change from whether this is a sustainable recovery to how strong and fast will this recovery be. The market is anticipating this inflection point," Paulsen said.

The Dow jumped 203.52 points to 10,226.94 -- its highest close since Oct. 3, 2008.

Investors were moving heavily into stocks that represent hard assets such as coal, metals, gold and other commodities. A continued environment of low interest rates combined with economies recovering worldwide, make commodities look attractive, analysts said.

"There is a realization that the economic environment is modestly improving. A lot of the fear that was in place earlier this year has started to subside," said John Buckingham, chief investment officer at Al Frank Asset Management in Laguna Beach.

"There is still a tremendous amount of money sitting on the sidelines, and we are starting to see some bullish signs in the market, a portion of that money may move in," and could start to push the market even higher, he said.

"Imagine what will happen once we start to have some real interest from investors," he said.